Published: Tue, August 29, 2017
Markets | By Erika Turner

Whole Foods Customers Can Anticipate Lower Prices with Amazon Acquisition, Sources Say

Whole Foods Customers Can Anticipate Lower Prices with Amazon Acquisition, Sources Say

"Everybody should be able to eat Whole Foods Market quality - we will lower prices without compromising Whole Foods Market's long-held commitment to the highest standards", said Jeff Wilke, CEO of Amazon Worldwide Consumer.

The store didn't feel any busier than normal, and without the subtle Amazon logos on dozens of the new orange tags designating new lower prices, you might not realize that Whole Foods has a new owner. "I was expecting price cuts across the board". The online retail giant also plans to integrate its technology into the company, eventually allowing customers to order groceries online and even use Amazon's Prime membership as a loyalty program for special savings and benefits.

Some analysts estimate that Whole Foods would have to cut prices by 10 to 15 percent overall to truly compete with other food sellers. As stated in their press release, Amazon hopes to offer more in-store benefits and discounted items as the two companies work out the logistics of the acquisition. The company on Wednesday received the green light from the Federal Trade Commission that the deal with Whole Foods had passed the smell test and it was free to proceed with merger proceedings.

Amazon executives said last week that the goal is to make healthy and organic food "affordable for everyone".

Amazon also said it will start selling Whole Foods brand products on its website, a move that sent down shares of packaged food sellers including Kellogg Co.

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"Just bringing it to price parity doesn't necessarily mean you're going to win [shoppers] back", Feldman said. Whole Foods' gross profit margins have declined by roughly 250 basis points since the second quarter of 2013, to 34 percent last quarter. Many people buy the same groceries each week; a system that learns users' food preferences and then automates their delivery or provides sales based on that knowledge would resemble Amazon's ability to provide subscription deliveries via online purchases of nonperishable goods.

Economists sometimes credit Amazon and other ecommerce companies focused on low prices with contributing to lower inflation over the past decade or so.

By convincing more Prime members to go to the store, Whole Foods is looking to wipe away the "Whole Paycheck" label that the grocer has suffered from in recent years, and to be more inviting to shoppers beyond the upper middle class-to-upper class clientele the grocer already attracts.

Amazon said those changes were just the beginning, but didn't give details on what more is coming. "Hopefully they'll get more items". This will include adding Amazon Lockers in some Whole Foods locations.

"We waited until Monday to come shopping", said the 41-year-old, who shops at Whole Foods about once a week for most of her groceries.

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